Soni Sori, a tribal teacher from Dantewada district in Chhattisgarh, was arrested from Katwaria Sarai area.
Soni, who is in her 30s, was later brought before a court which sent her to judicial custody for a day.
Human right activist and People's Union for Civil Liberties (PUCL) general secretary, Kavita Shrivastava, however, condemned the arrest saying the cases against Sori are fabricated.
"The cases framed against her are fabricated and her arrest is illegal. She is being falsely implicated and it's a complete violation of human rights," said Shrivastava whose house in Jaipur was raided by Chhattisgarh Police Monday in pursuit of Sori.
Shrivastava, who broke down in a press conference here, charged the government of "silencing the dissent in the country".
"The raid at my house was an act of collusion between Rajasthan and Chattisgarh governments which want to silence their critics. They searched my house with a warrant in which no IPC section was mentioned," she added.
Chhattisgarh Police, in July, filed a case against Sori for allegedly collecting Rs.15 lakh from a contractor of the Essar group.
Following the registration of the case, police picked up her nephew Lingaram Kodopi in Chhattisgarh accusing him of being a Maoist sympathiser. He alleged that police had implicated him.
In 2010, Chhattisgarh Police booked Sori in a case related to an attack on Congress leader Avdesh Gautam's house.
There are five different cases registered against Sori in Chhattisgarh under various sections of the Indian Penal Code, police said.
Sori, who left her studies in a medical college for a government job at Sameli village as warden of a residential school for girls, later went into hiding.
An Essar group general manager D.V.C.S. Verma was arrested Sep 27 from Raipur for his alleged role in paying "protection money" to the Maoists to help the company reopen a 267-km iron ore slurry supply pipeline in Dantewada district.
His arrest followed questioning of Essar contractor B.K. Lala, who was caught while handing over Rs.15 lakh.
